Murray objects to bankruptcy

March 26, 2013

Murray Energy Corp. is objecting to Patriot Coal's plan to dump more than $2 billion of its pension obligations onto other companies.

The local company filed its objection in U.S. Bankruptcy Court for the Eastern District of Missouri.

On March 14, Patriot filed to modify its collective bargaining agreements with the United Mine Workers of America to "obtain critical financial relief in a time frame that avoids severe business disruption."

Missouri-based Patriot has nine coal mining operations in West Virginia.

"Our labor and retiree benefit costs have risen to levels that simply cannot be sustained given the challenges facing the company and our industry," said Patriot President and Chief Executive Officer Bennett K. Hatfield. "All of our employees and retirees are being asked to make sacrifices to help Patriot emerge from bankruptcy. These sacrifices include reductions in compensation and benefits for salaried, union and nonunion employees."

According to Murray, Patriot Coal is one of the signatory companies to multi-employer collective bargaining agreements with the UMWA, which provide for the aforementioned retiree medical coverage and pension benefits. If successful, Patriot would leave its unfunded liabilities to the remaining signatory companies, including Murray Energy's Ohio Valley Coal Co. Powhatan No. 6 Mine.

According to Patriot, the company's UMWA labor costs are not competitive with other coal producers that operate under more flexible work rules and a lower labor cost structure. Patriot's proposal seeks to adjust wages, benefits and work rules for its unionized employees to a level consistent with the regional labor market.

UMWA International President Cecil E. Roberts has a different take on the matter.

"They're demanding massive changes to the collective bargaining agreement, and they want to scrap the health care benefits our retirees earned through decades of blood and toil," Roberts said of Patriot.

Murray Energy founder and Chief Executive Officer Robert Murray also has said President Barack Obama's policies are forcing the closure of active mines, along with delaying or canceling the opening of previously planned new mines. Last year, Murray closed the Red Bird West mine near Brilliant. At the time, 56 people worked at the facility, but employment levels there reached as high as 239 when the mine opened in 2007. Murray also cut 29 mining jobs from the Powhatan No. 6 Mine.